What does money mean now?

Transcript

Transcribed by machine from the recording.

Scott Chris, how are you, my friend? Well, you know, so I live in London and London's coming back to life. And we're recording this. It's on a Saturday. So this afternoon I went to this venue in central London called Somerset House, just this beautiful kind of palace in the middle of the city for the London Design Biennale. So it's basically a big design festival. And, you know, submissions from all over the world. This is going to be great. Getting back out into, you know, being a culture vulture again, which is one of the main reasons to live in a city like London. We're going to go to this event that like, oh, yeah, so easy to go to because I'm in London. And it was it was pancake flat. It was really disappointing. I walked out of it afterwards like, what was that? And I'm talking to my partner afterwards. I mean, charitably, we decided that the best explanation is that because of COVID restrictions, they just couldn't do much creative stuff with a design festival. But like a global design festival, I expect to be blown away and walk out of there thinking like, whoa, right, I'm thinking totally differently now.

about you know x y z and you know and 23 other letters in the alphabet and instead it was like hmm so you know hits and misses that's also part of the life of a culture vulture i guess i was just in the car a minute ago and i was listening to public radio and i heard a report that they're actually they are

Chris Trying to kind of keep restrictions in London because this new variant that's apparently more transmissible and people are, they were saying, pressuring Boris Johnson not to loosen restrictions.

Scott Well, I mean, we'll see how this goes. It is, so I think we've talked about this on the podcast before, but at the outset of the pandemic, talking to one of my global public health friends, And he said, you know, like, take a good look around, Chris. Nothing that you are about to see is actually driven by public health considerations, which is as an insider saying that, like, I know how this stuff goes. So much of this is going to be politics and business. And the decisions around, you know, when to close, when to reopen are complex decisions for governments to take. And they're highly politicized decisions. And so, you know, who knows, I guess is my summary there, what they're going to do in this country about it. But anyway, for the moment, we could go and have what I was hoping would be, You know, like, I love having my mind blown. I mean, how else do we see new things but to be shown them?

I did take away a couple of interesting things. One is that in July 2021, across Europe, they're going to ban single-use plastic utensils. So things like plastic forks, for example. And so they had a room which was basically, imagine that you were in a museum of the future. There's going to be a display of how people used to eat with these plastic utensils. So all of these plastic utensils To experience the new relationship with this everyday artifact.

Chris That was kind of cool. Will you have to have, like, metal utensils?

Scott I mean, what's going to replace... Or, you know, or those, like, kind of, like, wooden forks or... Anyway, it's... Go figure it out, society. You can't use these anymore.

Chris Right. So you could have disposable stuff, but it can't be plastic. It can't be plastic. Yeah. That will never happen in the United States. Let me just tell you right now.

Scott That's just... Here's another one that I learned that was quite interesting. So one of the rooms had... It was a design for kind of like a collar, like a little... I'm not going to explain this very well, but kind of like a little collar that could fit onto an automobile tire, like almost like a brake pad, but around the outside of the tire. Microplastic, basically like little bits and pieces flying off of tires is the second largest source of microplastics in the environment.

Chris Wow.

Scott Yeah, I had no idea. That's interesting. But, you know, when we think about like vehicle emissions, we think about, you know, what comes out of the tailpipe. And as we move to autonomous electric vehicles, that's going to become less of a problem. But the plastic rubber pollution from the wear on tires is actually probably going to increase, especially if we move to this world where you have these autonomous vehicles that are just moving 24-7 on the road. So this was their solution for a problem that I didn't even know existed, but apparently is a really big problem.

Chris So this sounds better than your initial version.

Scott You're right, it does sound better. Trust me, there were parts of it that were really dumb.

Chris All right, I will take your word for it. So today we're going to talk about money.

Scott We got to talk about money, right. Which we've never done. The thing, you know, there's so much that we have to talk about is part of the problem. And I guess another part of it is that, you know, neither one of us are economists. And so it does sort of feel sometimes that, well, is that really, is that our... Never stopped us before. Well, okay, you're right. Yeah. So that was kind of the decision. And then the, I think what, you know, the event that really made it timely to say, you know, we got to stop everything. We got to talk about money. And what does money even mean now? This was the latest budget that over there on your side of the pond, the Biden administration dropped, which was how big was that budget that they proposed?

Chris A little over $6 trillion. What does a number like that even mean? That's like $2 trillion more. And I don't know if this is in today's dollars or whatever, but like $4 trillion of government spending got us out of the Depression. You know, like basically the World War II spending. So we're doing this in one year. I mean, this is a big... But, you know, it's funny because I didn't realize, I did a little research a couple years ago. We had like a $4 trillion budget, or 2019, I think, maybe. So, I mean, these things are just growing and growing. And so I don't think $6 trillion is going to be the record by any stretch of the imagination.

Scott Right. But, you know, like so record breaking budgets, you know, cryptocurrency. There was just new, I think it was just today or yesterday as we're recording this, an agreement reached around G7 countries to establish a global minimum corporate tax of 15%. You've got all sorts of like weird stock market behaviors right now with like meme stocks. It feels like now is the time. to take a step back and and really explore what is this thing money which you know is is both so important and at the same time seems so imaginary that it it's kind of getting hard to get a hold on like wait what is this thing and how important is this and how should i

Chris Monopoly money on one end, right? Let's say it's on a linear spectrum, right? And on the left side of the spectrum is the thing that seems least valuable or most imaginary. You've got monopoly money, right? And on the far end, the other end of the spectrum, you've got, say, the US dollar or the yen or something, right? Or the pound or something. And then in the middle, it's like cryptocurrency. And I think people look at cryptocurrency as this, oh my gosh, what are you doing investing in Bitcoin? But the only reason that Bitcoin is not fully on the right end of the spectrum is because enough people haven't decided it should be there. And a lot of people are banking. I mean, I think the crypto kind of move is just banking. Well, the trend is going this way, right? It's going to give us more autonomy.

It's going to kind of unmoor currency from governments and things. And it's just fascinating that these arbitrary people looking at people that are investing in Bitcoin like they're investing in monopoly money or something. I mean, these people are just making a futuristic bet, right?

Scott Right. I bet that other people will continue to see it as valuable, even if some people don't. And I can't remember, you know, who I was reading, just sort of history of money and stuff, but made what I thought was a brilliant point. All money is intrinsically worthless. It has no inherent value. And so just as you say, in that respect, monopoly money and the US dollar is the same. Intrinsically, it's worthless. It's people's willingness to accept it as a medium for exchange that gives it any value at all. I was thinking a bit, so we'll have to talk a bit off and on about my friend, Doug. What's Doug's last name? Rushkoff? Rushkoff? I don't know how to pronounce his last name. Doug, let me know. Rushkoff. He wrote a book called Throwing Rocks at the Google Bus. Really brilliant critic of sort of media and society. And in one of his previous books, he did some research of kind of like the medieval, I guess the origins of sort of paper money in medieval Europe, at least for sort of the European experience. And talking about how really you roll back to medieval Europe, like most people had no need for money at all. Right. I'm a peasant. You're my landlord. I work the land. And in exchange for that, you know, I get my livelihood taken care of. I get shelter here. I can keep some of the grain. But I didn't need any money. The exchange relationship that kept me alive was my labor for your patronage, basically. And in that society, the only people really who had money were the aristocrats, who sometimes had to kind of move wealth between

Anybody else said. And in that time, you know, you had a lot of, you know, local markets where people had local currencies. So rather than, you know, rather than something issued by, you know, kind of like the U.S. Federal Reserve or something like that, you had the baker at the local daily market. And the baker always sold 100 loaves of bread every day at market day. It was well understood that there was a demand for bread. So the baker could, at the beginning of market day, he could just basically write receipts, 100 receipts on 100 pieces of paper, redeemable for a loaf of bread at my stall. And at the start of the day, he could trade those receipts for the things that he needed, flour, You know, maybe he wanted a new pair of shoes. So he was just printing his own money and people accepted it because they knew that they were going to need to buy bread later that day. And so in a sense, like the most, the people who were there at market selling the daily essentials, they created a money supply just to help exchanges happen in the marketplace because no one had gold or silver and it kind of worked. And then, you know, where these central currencies came about was when, you know, some princes and courts said like, hey, we got to get in on this game. If we outlaw all local forms of currency, And we create a central currency that everyone has to use.

Then in order to do business in the market, that baker, he needs to borrow money from us. So he can't write his own money. He's got to borrow it from us, the central bank. It will give it to him, but we're going to charge him interest. And that's how we're going to make money, by being the controller of the central money supply. So Doug wrote this really interesting book where he kind of looked at the economic incentive that led, you know, sort of, you know, France, England, whatever, to create central currencies and abolish local currencies. Because when you're the only one with a medium of exchange, everybody needs it. And they got a board from you, and you can charge them interest, and that's how you get rich. So I think it's really, it is really helpful to kind of know the history of the money that we use all the time now.

And knowing that history, actually, what cryptocurrencies are trying to do at a kind of theory level, like the people who are thinking of cryptocurrency as a way to democratize the power To create the medium in which exchange happens and kind of take that power back from the states and reinvent the local currencies that used to exist in medieval marketplaces for market exchange to happen without the role of a central bank that charges interest for supplying that medium of exchange to people who need it. I think that history is really When you know that history, you can appreciate at a kind of theory level what cryptocurrency, what Satoshi was about when he invented the algorithms for Bitcoin. But it's also interesting how that's actually not at all what the behavior and the excitement around these cryptocurrencies is about today. No one is thinking about it would be great if we could democratize the creation of mediums of exchange. It's just another gold rush and everybody's rushing into the gold because...

It's difficult to acquire assets if you don't have any. And there are many people who have basically taken lint from their pocket and turned it into gold if they sort of got onto the cryptocurrency bandwagon at the right time. And now you've got so many other people who just want to repeat that magic trick that I sort of feel like no matter how... So, lots of threads, and we haven't even begun to scratch the topic yet, but those are some of my initial thoughts.

Chris Yeah, yeah, no, and I, I mean, part of, like, what made me want to talk about this with you is I, when Biden's budget came out, and it was this biggest budget we ever had, and big by a significant amount, I mean, a jump that was pretty significant. You know, like I started reading about modern monetary theory and I'd never read about this stuff before. And there are all these economists that basically say, well, if you meet three standards, You should deficit spend. And the standards are, A, you print your own currency. The second is that you have a floating, not a fixed exchange rate. So your currency is in the marketplace, I guess. You don't have this fixed exchange rate. And you're not on a gold standard or something. And the third is that you pay your debts in your own currency. So China will take dollars in payment for the United States debts, right? And that kind of thing. And basically, these economic theorists argue that if you meet those standards, and there's a lot of countries in Western Europe that wouldn't meet those standards, right? But if you meet those standards, you can deficit spend as much as you want, unless it causes inflation and kills the currency. So basically, the only reason...

The economic theory is that they're saying basically you're not doing your job. You're not putting enough money in the economy to get to full employment and to juice economic growth. And so basically you shouldn't be proud of budget surpluses. If you're getting budget surpluses, you're doing something wrong. And so that's something that's like in American politics, right? Both parties generally have agreed that deficits aren't good things. Now, both parties have done deficit spending and argue for doing it for different reasons. But both parties, when they balance budgets, are very proud. Oh, look, we didn't deficit spend. And that's looked at as an achievement. And for these people, the modern monetary theory is like, no, you shouldn't be bragging about a surplus. If the government is running a surplus, it's actually not being activist enough in economic activity, which just turns so much intuitive thinking about money on its head.

Scott Let's take a moment on that. How intuition can... can either fit or jar with the present context. There's this great quote from Marcel Proust that I found. Do you say Proust or do you say Proust?

Chris Over here, we'd say Proust.

Scott Okay, Proust, that I found while I was reading just some of my old economics books. But he said, the real voyage of discovery consists not in seeking new landscapes, but in having new eyes, which I think is just a beautiful phrase. And, you know, this notion of, you know, is balancing the budget sort of like being good, serious political leadership or foolhardy? You know, one thing that's changed since the 1990s when, you know, balancing the budget was, you know, that's... All that, you know, what Bill Clinton was trying to do and what, you know, north of your border in Canada, that was the big agenda. Like the debt is running away with us. We have to balance the budget. We have to get into surplus. Money was expensive. Interest rates were high. And so, you know, when you were running a deficit, you had to borrow more money. The debt was growing. You had to pay more in interest every year. It was crowding out these other things you wanted to spend money on.

Fast forward to today, we still have the intuition, as you say, that balancing the books, just like in a household, yada, yada, yada, is good management, but the context has changed. And this is, I mean, this is a good example of, a good example that sort of applies to the whole world, that our intuitions are only as good as, Our intuitions are only as relevant as the context in which they formed has not changed. That's not very artful. Figure out the better form of that. We should write that on a wall because there's some... Right?

Chris And what the modern monetary theorists are saying is, look, it's just what you've said. They're like, of course you want to balance budgets in a household, and running a surplus in a household is great. But a government that meets those three aforementioned criteria is not a household, right? And so it's trying to think like, it's basically, sometimes you have to do counterintuitive thinking, right? To get in touch with reality.

Scott And I think that sometimes it's clear, it helps to revise your own intuition when you can kind of look at other people who are in different situations. So, you know, right now, if you're the US government, I think you can borrow, you know, you can borrow money for basically like 0% interest rates, more or less, right? Basically there's the interest rate is near zero. If you're South Africa, I looked it up in the Financial Times today. So if you're South Africa and the part of your debt, of your national debt that's coming due this year that you need to roll over, like I got to borrow money from Scott to pay off Mary who needs her money this year. If you're South Africa, you're paying about 10% to 12% on that new borrowing. If you're Ghana, you're paying, you know, 15% on that new borrowing. So, yeah, if, you know, if I'm South Africa and I want to borrow $100 from Scott...

And I say, okay, great, yeah, I need this money. And you say, you just got to know, you got to give me $110 next year or $121 the year after that. And you start to think about, okay, well, that's, you know, should I borrow that money? Am I going to be able to create enough? New money with it to pay you back and get ahead. But if I'm the U.S. right now and I say, I want to borrow $100 and a year from now, how much do I have to pay back? $100. Or 10 years from now, how much do I need to pay back? It's still just $100.

Chris Or like $100 and like two cents or something like that. Yeah, yeah.

Scott And you start to think, I'm sure that in 10 years I can figure out how to turn that $100 into more than $100 and pay you back that $100. That original money, and I get to keep the rest. I mean, any one of us, I think, would choose that. I'll borrow a million dollars in 10 years, pay you back a million dollars, and I'm pretty sure I can figure out what to do with it. So if you're South Africa paying, you know, 10, 12% on new debt, maybe you think about it, but if you're the United States and it's basically, you know, 0, 1%, then you start to ask yourself, you know, what could we do with this money? We could build, like, you know, and... If the world wants to give it to us, how much money should we take for this deal? Let's just take as much as we can because there's a lot of things that we could do. Apparently, China or Russia has managed to figure out how to build these UFOs that do these things in the air.

Maybe we could build some of those. There's a lot of things you can start imagining doing with the money. It's interesting how... I guess this is one part of the question. What does money mean?

Chris Like these new economic theorists would argue, well, that's, you know, really taxation isn't to pay bills. Taxation is just to keep the economy, to keep inflation down. And so basically you take, taxes serve the function of taking money out of the economy, right? So it's, you know, so it's, you're trying to have this really, you know, I always say like leadership is sort of, it's a big like balance between being a thermometer and a thermostat, right? Sometimes leadership is taking the temperature and sometimes it's setting the temperature. And so that's sort of what the modern monetary theorists are saying. Sometimes it's this balance between thermostat and thermometer. And part of taxation's function is being a thermostat, so that we don't juice the economy too much. It's just very interesting because that's just so different than the way we think about taxes. Because you were saying earlier that you're balancing budgets, and of course you're

And I've just found it, I've only been really thinking seriously about this for like maybe six weeks or so. Like I've not really considered this. And then you and I have been talking about it. And I find I'm having to, it's just causing me to do a lot of intellectual work. And I think it's not because the concepts are particularly difficult, but I'm having to at least experiment with untraining my mind or retraining my mind to say, okay, no, no, no, no, no. When I think about words like debts and deficits and taxation, I need to really rethink Or at least be open to rethinking how these things function, if this theory is right, right? And that's just really challenging to do. What do you want to take?

Scott So I've got two paths diverged in a wood. There is this, there is so much. Do you know what's great about that poem?

Chris No, what? Basically, that poem is complete bullshit in the sense of, well, it's not bullshit. It's everybody, like, it's always read at college graduations and stuff as if, oh, do the road not taken. But if you read the poem carefully, Robert Frost is saying, well, I didn't take the road not taken. But years later, I'm going to be telling this story and saying, I took the road not taken. He puts it in the poem, the text of the poem, that basically he's recollecting and bullshitting and saying, oh, I took the road not taken. But the idea is it's pretty clear in the poem that the narrator did not take the road not taken, or he just kind of did something conventional, and now he's saying he took the road not taken.

Scott So what you're saying is that none of the people who read that poem aloud have read the poem?

Chris Think about it. It's just one of the most interesting things. And Frost does it so well that you can miss it.

Scott So I feel like, and I'm totally happy to go either or both these ways with you, but also thinking about our listeners and trying to map out where this conversation might go. There is so much territory to explore around how do we think about these almost like state-level finance questions, our relationship with money in the state, debt and deficit and taxation and what's all going on there. I feel like there is also so much to explore around what does money mean to us as persons living in a society where Where there are these kind of this social technology, which is kind of like a universal utility converter and which is itself going through so much change as new ways of exchanging with one another are being explored and tested. So where do you want to take this conversation next? Do you want to veer toward the personal? Do you want to go deeper into kind of the state level?

Chris No, I think I'd like to talk more about value because I think this is really interesting. I just think even our relationship to cash, right? So when I was growing up, cash was like if I got like $10 in a birthday card, Oh my, a $10 bill was like so valuable. Like, I mean, just looked, like having cash in your pocket felt so powerful. I mean, like, you know, you could go down to 7-Eleven and buy a pretzel and play video games and all this, like, you know, and now cash, I am so indifferent to cash. Like I have in my backpack here, I bet you there's $30 in cash or something in different, you know, mixed bills. And I don't even think about it. Like, I'm so indifferent to cash. And I almost, you know, because everything is so electronic, right? And money becomes numbers in a ledger, right? In a digital ledger. The cash almost seems past sight. So having a bunch of cash in my pocket does not feel like it used to, because I can lose it.

I mean, what if it pops out of my pocket? It's just interesting how something as basic as a billfold can really change, where it doesn't feel like it used to feel. It used to be like, man, if you had a roll of bills in your pocket, man, you're ready for Friday night. Thanks for watching! This is one of the interesting properties of money. You're really talking about two things there.

Scott You know, one is the physical instrument, which has become digitized. So we don't need the physical analog piece of paper anymore. You have digital cash. And then there is the purchasing power, which, you know, in what you've described, doesn't necessarily change. I still appreciate the purchasing power, but it's the physical medium that has become kind of cumbersome. When you think of, so, yeah, like, wow, 10 bucks, dude, you were, like, rich kid.

Chris Think about an app like Venmo, right? Like, let's say you and I went to a pub for dinner with, like, two friends or for happy hour or something, right? Well, you know, we get the bill and we're splitting it four ways. Or let's say I had three drinks, you had two. You know, you do all this calculus, you know, where, okay, what is Chris O? He got the bangers and mash, or he got chicken wings, and then you get all this cash out, and then, oh, I gotta go to the ATM, I don't have cash. Now we have Venmo, and I've done this with people, like, oh, how much was your share of the bill? Oh, it was $12.50. So I can just get on my phone and send you $12.50 in an instant, right? Like, I don't even have to walk over to the ATM, right? It's just so efficient.

But you're right, this thing, it's almost like we're talking about platonic forms or something, like, you know, where, you know, Plato thinks, you know, when you look at things in physical reality, they really symbolize these things, these eternal realm of the forms, these non-material kind of realities. And it's almost that way with money, right? Like, money is this almost like platonic form, right? It exists in this non-physical, You know, I think if I go back to, you know,

Scott Your childhood self who gets so excited when there is that $10 bill in a card. I think if Friedrich Hayek were standing next to you in that moment, he would point at you. This child with the light on his face and say, this is what I mean when I say that money is one of the greatest instruments of freedom ever invented. Because in this money, this child, Scott, can exchange that $10 for This infinite variety of wants that he might possess. And before the invention of money, you wouldn't have that, right? You have certain things of value. Like, you know, I can do some labor. I'm a kid. I can move these things for you. What can I get for it? Well, what do you have? You know, I've got apples. Okay, so I can do this labor and I can get these apples. But it was... It was always this kind of, you know, barter between what I have on me and what you have on me. And then, you know, the intervention of this utility converter that can convert, you know, my wants and needs into your wants and needs is really a kind of magic that enables much more complex Exchanges to happen. And as a kid getting that $10 bill, you're kind of, you're just intuitively grasping all of that. Like, oh, I can do so many things. I don't even know what I want to do with this yet, but I can do it now because I have this thing.

And I'd like to actually, you know, like, I wonder if that relationship with money is changing at all or might change at all now. Because, you know, like classically, there has always been An argument that this magical device called money that Hayek says, like, this is the greatest tool for freedom ever invented, also has this kind of dark consequence that I no longer need to understand what Scott's wants and needs are. All we need to do is figure out a price. And if we agree, then whoever you are, whatever's going on in your life doesn't matter to me. I could get the exchange done. I forget, I gotta look it up in the book. I think it might've been Charles Eisenstein who wrote this book, Sacred Economics. And I'll check the quote later. We can put it in the show notes. But he wrote, the first conclusion I reached is that money makes us exquisitely inept. Thank you so much.

Chris Absolutely. And so it's interesting. So we would, you know, I want to say two things, like two possible, two of my favorite sort of TV shows and movies. So you have Star Trek on the one end, which is generally kind of evolutionary in its imaginative conception of humanity, right? Like things get better and better. There's all this kind of international cooperation which leads us into space and the struggle is to sort of, you know, cross boundaries with other species and exploration and there's no money. And there's this great scene in Star Trek IV where Kirk is on a date. He goes back to the 1980s where he's on a date and the bill comes and this woman really thinks he's crazy. She doesn't think he's really from the 21st century.

Scott And she goes... I love how you always bring Star Trek into this stuff.

Chris Oh, yeah. And she goes, well, I suppose they don't use money in the 24th century. And Kirk goes, well, we don't.

Scott So you're buying just FYI.

Chris Exactly. But then also I think about like The Walking Dead and like a post-apocalyptic scenario. And there's this great episode of The Walking Dead where this Episcopal priest character is walking through Negan's compound, which Negan runs this kind of community called the Saviors, which they're viewed as the enemy of the kind of protagonists in the show. And yet you look at this really functional... The priest challenges where you have people working in the economy or in this factory, and then you have people that are the soldiers in this, and they're not at all treated fairly. And Negan goes, it's an economy. They're winners and losers. And they work for points and they develop a point system. And so Negan has constructed an economy from chaos, but there's no money. And there's this one great scene from The Walking Dead where they find a crashed security van you would carry deposits in from bank to bank. And they're just throwing this money around saying, remember when this meant something?

And it's only a couple of years after it did mean something, right? And then this thing just means absolutely nothing. And so it's just interesting because there's a post-apocalyptic kind of view of it. And there's the science fiction futurist view. One is a little more dark and another is a little more hopeful, but neither of them have a place for money.

Scott It's interesting, too, just on the Negan example in a post-apocalyptic future where there is an economy of exchange where instead of using central currency, they've kind of got another currency going. They've taken something else and said, that's a unit of exchange. And actually, there are many interesting experiments of this happening in the world today. I mean, one of the more famous ones is... I forget the term for it in Japan, but they have these carrying currencies where basically the unit of exchange is an hour of your time. So... And I think it was after the financial crisis in Japan, some people started these carrying currencies up and they kind of took off and they're still in existence today. But the idea that like, let's say if you do an hour of caring for an elderly person, you know, doing their groceries or something like that, That hour of care gets banked in a kind of favor bank. And in the future, you can get somebody who is willing to, who is in that economy, they will do an hour of caring for you.

So as part of saving up for your retirement today while you're able, you can do a lot of help for the elderly and bank up a kind of savings of people taking care of you so that when you're elderly and you need other help, you've got that. So you've turned, you've basically what you've done is some magical thing where you've taken your time in the present and you've converted it into someone else's time in the future. And it functions as long as people are willing to continue to participate in that economy and kind of, you know, on an honorable basis, both like accrue and discharge what they've committed to do. In that economy. I will just say briefly, it'd be interesting at some point to talk a bit about China, because it's also, I think it's important to not romanticize barter economies. I mean, there are a lot of benefits to being able to exchange with a neutral medium where I don't need to get into a complicated personal relationship with you. So I think as someone who's studied sort of modern Chinese history, so you think in like, In red communist China, there was no money. You didn't have money. You had a work unit. The state supplied everything for you. And so in that social context where everything was rationed, there was a whole shadow economy of basically gifts and favors and banquets that you invited people to.

That's called Gwansi. And so the way you got by was, you know, you had people that owed you favors. You know, we've run out of our grain allotment, but somebody can get it for me and they're going to give it for me because, you know, I'm a dentist and I helped them when they had that toothache. And like, you know, there's a kind of a complex ledger. In the formal economy. And as China liberalized, you know, it definitely changed people's social relationships, that they didn't need to maintain those things. And some was lost, but some was gained because there's a lot of exploitation, right? There's a lot of violence. There's a lot of differing power relationships, you know, various sort of gender dynamics in place. And the fact that you could just say, no, no, no, like, look, let's just have money solve these questions for us.

In some ways, disentangled people who didn't want to be entangled from one another. Money plays this rich and interesting role that's not at all... I think there's kind of a tendency to either deify it or demonize it. And the reality is all of those things.

Chris Yeah, and I think it testifies to, I mean, the important thing, I think money, well, at least for our conversation, the thing that makes it important and interesting to me is it bears witness to the human capacity for an imaginative creativity, where people can come up with ways I like that. Yeah, and I think that, and this has been so much of your work. I mean, you know, as a writer and speaker and political scientist, I mean, you push people to questions and imagination over information and just data mining and stuff. And I think that's the question. And so this is what's interesting because as you and I are talking about this, as we're talking about money and just thinking about what is it, It has exposed a lot of creative thinking in the both of us. Like, wow, this is really interesting. And it makes us think about the ways humans do exchanges, right?

And relate to each other and that sort of thing. And I think that's the power. Like, it's something like asking a question about what is money is really asking a question about what do humans value? And how does value translate into the construction of our lives together?

Scott So you've just summarized the 20th century.

Chris Thank you, everybody. Thank you. I'm here till Thursday.

Scott But if you think of... So the name I have in my mind at the moment is Karl Poliani, who wrote, I think, the structure of scientific revolutions. He was the guy who coined the phrase paradigm shift.

Chris He's amazing.

Scott Yeah, like amazing, amazing.

Chris Convert to Christianity from Judaism.

Scott Really? I love that you know that.

Chris I didn't know. Yeah, no, Polanyi is one of them. Yeah, I love Polanyi. Yeah, he's amazing.

Scott So he wrote a book in the 40s called The Great Transformation. And basically the question he was asking that book was, you know, the 19th century from, you know, admittedly from sort of a quite European perspective on the world, a Western European perspective. The 19th century was quite, was relatively stable. Here we are in the middle of the 20th century. We've already had two world wars. Why? And so he described what he called a double movement. And the first movement was this sort of industrialization, the decoupling of economy and society and sort of turning society into the service of the economic machine. And then a counter movement, which was, oh my God, this is destroying the... The nation, fascism, or, oh my God, we need to protect the workers, communism. And that was his history of the 20th century. I think that, so our relationship to money, I don't have the horsepower to really, I haven't thought about this, and I think it's gonna take much greater minds than me to work on this, but I think that one of the roots The classic equation is capital plus labor plus land equals output.

You know, or at least capital and labor. So there's a money, there's like a capital investment, financial investment, there's also a labor investment. And one of the challenges in the world today and why you see, you know, inequality becoming more and more extreme is that the capital investment sort of, you know, gains that shareholder wealth. But the labor investment, you know, seems that, well, doesn't participate in that kind of wealth creation. And in some cases, you know, doesn't even manage to escape poverty while so much value is being created. So I think there's something really there that we have reduced the notion of investment, what counts as investment, to money. And I think... I think that was sort of like we weren't watching and we slipped into that because, you know, so the value of money, the magic of it that Hayek talked about is that now we have the means to translate any one person's wants and needs into anyone else's wants and needs. But along the way, we move from a society where, you know, different people want different things and we got to sort that out to one where all people want the same thing. Which is money.

And the kind of the centrality of money has caused us to lose sight of the broader economic equation of how value is created, that it's the coming together of the financial capital. Human capital, natural capital to produce stuff of value to society. And it seems to me that that's one way to kind of step back and explain a lot of what is going on in the world in terms of the tensions we see, whether it's... It's so interesting, even the way you say that, natural capital, right?

Chris Like we're in this sort of framework that a certain kind of monetary system defines how we look at like... Oh, you're totally right, yeah. Oh, capital. We've got natural capital. You've got to put it all into the economic machine, right? Right, exactly. And I'm not critiquing you. I do the same thing. It's just interesting that you have to almost unplug from the matrix a little bit.

Scott Otherwise it doesn't make any sense to people.

Chris Yeah, right. No, I know. It's just interesting. I'm just, I was like, oh yeah, Chris is making sense. Wow. But the way he's talking is like we've, it's in not just economic terms and money-driven economic terms, but a certain kind of economic symbol structure.

Scott I think the other thing too is, wow, totally. And maybe another way to put, another way to phrase the same thing is, you know, because money is this universal converter for exchange. And because it makes it possible to live in a world where everybody wants the same thing, money, because then we can turn it to whatever it is we particularly want. It's kind of, it's made it difficult to have a nuanced world. So let me say, I'm gonna borrow Eisenstein's words again. Because I thought he put this idea pretty well. He said, money's impersonality fosters cooperation over vast social distances. It helps to coordinate the labour of millions of people who are mostly strangers to each other. And that's great. But do we want our relationships with the people in our own neighbourhoods to be impersonal too? And I think that, like, what I think is expressed in there really well is that It is this fabulous medium of exchange that we use it everywhere, including in local contexts where we maybe could rely on other forms. And you almost feel like during the pandemic, a lot of kind of at a local level, we rediscovered the invisible people in our world who were right there engaged in money relationships. With us. And because it was a money relationship, we had no need to understand their individuality, their wants and needs. All we needed to understand is that they were in a money relationship and that they were, you know, freely participating in it. That was all we needed to know. And suddenly this other layer of reality erupted into our lives, which is they are also biological beings and therefore a part of our health, that our health...

So there's this whole other relationship that we've completely simplified away because money enables us to do that. And I wonder if that's not gonna be one of the big movements. The evolution of society in the 21st century is to really interrogate the role of money and to maybe figure out how to add more nuance. It's great for situations where it's useful and helpful to have an impersonal medium of exchange, but not every exchange is best served in that impersonal way.

Chris Well, yeah, and like Neil Postman's book, Technopoly, which is, I mean, it's a good book. I mean, Postman's a crank, but he talks about like what happens when, in a technopoly, he's like basically what happens is you switch from humans creating tools to serve the culture to the tools shaping the culture. So humans are no longer like making tools to serve their cultural matrix. The tools then take over the culture. And I think that's happened with technology. It's definitely happened with money. What you've narrated very well is this story where money becomes this helpful tool for impersonal exchange and to level a playing field in some ways and make things more universal. But what happens when this tool becomes... An animating principle. It gets a personality of its own. It's acting as though it's not a tool.

Scott So I have a very wealthy friend who likes to say, money is the devil. And I like the sharpness of that way of saying, no, let's personify this thing that isn't inanimate, but it is alive. And what he meant by that is not that it's evil, and I think it's a quite astute observation that, you know, as human beings, we have many appetites. We've got a sexual appetite. You've got like an appetite for food. You know, we have these vices and these wants. But most appetites, you can only have so much of them, and then actually you don't want it anymore. Like even sex, you can only have so much sex, and then you're just physically exhausted. You know, great food, like, oh, I want that bag of chips. But after the first, or the second, or the third, you don't actually, you don't feel, money is not like that. With money, there is no end. There is no biological feedback restraining your appetite to some upper limit. And so the appetite is endless.

And that's what he meant with money is the devil. And his belief is that really to constrain the devil, so you've got to decide for yourself when is that appetite satisfied and kind of drive to consume that and then have no more appetite for it. And I thought it's really interesting that, yeah, that's true. It's the only thing in our existence that we crave that we can never have enough of it.

Chris Yeah, no, I agree. And, you know, it's interesting, you know, I have a personal philosophy. If Nietzsche and Augustine agree on anything, it has to be true. But I think one, I would say some things about human desire that Nietzsche and Augustine both agree on, it goes back to Jesus when he says, where your treasure is, there will your heart be. And so, right, like treasure, so money's not quite the same thing.

Scott Say that again, say that again.

Chris Yeah, it's the words of Jesus. I'm quoting Jesus here. Where your treasure is, there will your heart be. And so your treasure is what you value, right? And Jesus actually talks a lot about money, because from this very thing, I think Jesus is thinking it's a psychoanalytic tool. I mean, of course, Jesus didn't know about psychoanalysis or anything, but I'm retrofitting Jesus here. But it's this great window into what you want. I always tell people, if I know what you think, I know a little bit about you. If I know what you want, I know almost everything about you, right? Because we're creatures of desire, right? And so the interesting thing about money is it's this almost X-ray, or it's this window into... The human soul, right? Because like you're saying, it's this exchange rate that says, this is what I want. And so it's a great diagnostic tool for what we value, which is ultimately, I think like human beings are meaning receivers and meaning makers, right? We want to receive and make meaning. And money is such a big part of that story because it's enabled us to sort of reify our desires. I mean, that's what's so powerful about it.

And why you want more and more of it, because you want to kind of keep desiring and making meaning and receiving meaning and stuff, and money enables you to do that in some interesting ways. But the question is, could we have a different kind of economy that wouldn't be dependent on money, where we could be meaning makers and meaning receivers?

Scott I think, let's get back to that in two minutes, but just to pick up this earlier point about our wants, because I think there was also a kind of... A cultural level at which it's established how much we should want and if our appetite to have affluence is endless or if culturally there's some kind of like, no, the objective here is something more modest than that for all of us. Where I'm going with this is, so I think of in ancient Chinese culture, so Confucius. Confucius had this concept called Xiao Kang and basically means moderately well-off. And so Confucius, the historical figure, was basically a counselor to emperors. And so he was the one who kind of said like, this is what you should be trying to do. And his advice to the imperial court is that your goal, what you're trying to achieve, It's a society in which the average person has more than they need, but is less than affluent. It's kind of like this Aristotelian golden mean, and they were all kind of hanging out at the same time, right? So there must have been something in the zeitgeist in sort of the sixth century BCE. But I think that's very interesting. And it seems to be, you know, you say it now, it sounds like, well, that's a very archaic idea, that the idea that the goal isn't for everyone to be affluent, that actually that would create an unbalanced society, a society that was kind of out of balance. What we want is that everyone's needs are met, but that we're not a decadent.

And so I think there is this sort of social, cultural level that informs how runaway the power of money, the role of money becomes in society. And I do feel that, you know, sort of in the modernity we live in now, it has totally run away. The more the better.

Chris Yeah, and so, yeah, and I think, you know, it's interesting. So, I mean, Max Weber is, you know, one of the deans of modern sociology, and not without controversy, but if you take seriously the Weber thesis, right, the Protestant work ethic and the spirit of capitalism, and basically, one of the things he argues is that there's never been a society that... Really kind of glamorized making money religiously or philosophically. So he thinks, like, you look at the history, and this guy read everything you could read at the time in the 19th century, right? He's like, you can find societies where making money was neutral, and you can find societies where making money was bad, right? It's not that they didn't have rich people, it's just no society made saints of rich people just for making money. And then he looks at Protestantism, and he thinks there's this unique thing... Where you get the sense of calling, right? Which, you know, you have an individual calling, and so you can break away from society. So you can do, you can break away from traditional family structures, right? And then he thinks you've got what he calls this inner aesthetic. The inner aesthetic, where basically, if you're the elect of God, one of the signs is that you're making money. But also, if you're the elect of God, you don't spend it ostentatiously. So what do you do with it? You put it into capital.

And so basically he thinks Protestantism with this doctrine of calling, which enables people to move people around, you know, like one of the examples he uses is, you know, there's this interesting, you know, the Christmas story, you know, Mary and Joseph had to go back to Bethlehem to register for the census. Well, you know, now we would think that's absurd. Well, just because Chris is from Regina doesn't mean when there's a census he has to go back. So he thinks Protestantism helps to sort of unsettle that, like, well, you're from this place, right? So now we've got mobile economic actors, right? And then when you get this thing where it's good to make money to show that you're blessed, but it's not good to spend it ostentatiously, he thinks basically Protestantism creates capitalism. And it's funny, too. You look at Europe, and the validation of the Weber thesis, I think, is what are the powerhouse countries economically in Europe, and what are the ones that struggle? And the Catholic nations generally are not as powerful as the Protestant nations economically. That's because Catholics make saints of poor people, and Protestants valorize making money.

There we go. A little quick introduction to Max Weber for our listeners. And there are tons of contemporary sociologists that still work off the Weber theory, and I think it's compelling. There's something about the spiritualization of money and making money that Protestantism did in the West. I don't know without Protestantism you could have had capitalism.

Scott And I guess you could say like to be kind of value neutral about it. You know, what is maybe if I think of like an evolutionary theorist and look at sort of human society is kind of like an organism or a species. What is the evolutionary advantage of being strongly incentivized to make money is that it drives you to participate more in the economy. It drives you to figure out, okay, what more things can I put into the economy? What skills do I have? What labour? What ideas do I have? That incentive drives me to figure out new combinations, new activity to create value in order to capture... And that complexity is richer, it's more innovative, there's more stuff happening, there's more things you can get out of it. So it makes sense. If I'm like an evolutionary theorist trying to figure out what does the money gene do? Why has it thrived? That it does encourage us, you know, not to be monks in a monastery, you know, sort of brewing beer or making honey, but kind of full participants in that messy milieu of the market square, causing new things to come forth. And so that to me seems like That's good, right? That is the sort of healthy generative role of making more and more variety of exchanges possible to happen. And then I think the other side of it is, and what stressors does it create? Things like inequality of outcomes that create all sorts of stressors. Thank you very much.

That's all the stuff we're dealing with now. If we just throw everything into this economy thing, then it might produce the richest economy, but it might not produce the best society or the best environment, which, going back to the conversation we had in our last episode, is the context. In which all this stuff is happening.

Chris And the ability as human beings to own what we value and exchange reasons about it. To get together and talk about what we value. I think that's maybe what money can do for us instrumentally. It helps us track things a little bit. Where things are going and what we value and what is important, not just to us as individuals, but in the sort of collective zeitgeist. And this is where I think it's been kind of all over the place, free-flowing conversation, but I think you and I are finding this thing, money, it actually could be a tool for asking really good questions. And I think that's the problem. I think there's not enough people I don't think there are enough conversations where we're looking at the thing in itself, like trying to analyze, you know, if we're like fish, the water we're swimming in, or birds, like the air we're flying in. I think this is a really good exercise, which takes some intentionality, right? This is what you, you know, why you've created Basecamp and a lot of work you've done.

As your own personal vocation is getting people into spaces where they can ask questions about big things that we're not asking questions about. Because we're just touching money all the time. We're touching it all the time, or we're exchanging it all the time. And most of us are not sitting thinking, what is this thing?

Scott And what is it for? You know, I think that it's interesting when you kind of go into the economics textbooks, as sort of did in preparation for this, and you kind of look up for the definition of money. What they actually define is what it is for, not what it is, right? It's a medium of exchange. Right? It's a social technology. This is how it's useful, which is fine. But what it is, what it has become in society is a kind of thing that's valued in itself, which is like, you know, you're a billionaire. Nuff said, right? You are an important, valuable person because of the number of points that you've accumulated. Like we've turned it into, because you can use it for anything, it's kind of become everything. It's become the end in itself. And that seems to me to be the thing we need to explore more. It's like, okay, what is the money for? You've got a lot of money, so what are you gonna do with those points? What is the point of it?

And to value those answers more than the number of points you have. Because the reality is, and maybe that's what I'm gonna start doing. I'm just gonna start talking about my points to myself. Because money, it has, like, it's got, there's so much going on in society that just sort of makes it alive. And it's kind of important to remember that money is not a living thing. And so maybe if I just rename it for myself, it'll seem less alive.

Chris I talk about my points. It's interesting, also in the 6th century, the Hebrew prophets are writing, and you get this, it's where ethical monotheism is really developed. And the early Israelites, you look at early... Ethical monotheism.

Scott I love how you just drop phrases like that.

Chris There you go.

Scott And assume me not to pause for a moment, like, okay.

Chris Yeah, it's not just one god, but it's directed towards an ethical telos. Right, right, right. And so, you know, like, the early Israelites were what was called henotheists, right? And so basically, they thought their god was the best, but they didn't disbelieve in other gods. I mean, they're just thinking, well, all right, Yahweh.

Scott My god could beat up your god.

Chris Yahweh, we're praying you can beat those gods up, right? It's like schoolyard kind of hijinks. But then you get the prophet Isaiah saying, basically that thing you're praying to, this little statue, is not real. It's just a hunk of gold or copper or whatever. And so that's what's interesting because money has become this, it's almost what I think the Hebrew prophets would call an idol. It's taken on, it's been reified and then deified as if it's really got a personality and if it's really got these things. And maybe we just need to demystify it.

Scott Let me, yeah, demystify it and I think recognize the other stores of value that we possess. We tend to be, I think, reductionist about our personal wealth is really a question of how much money do you possess. But to give a kind of strong contrasting example. So I was watching a program here tonight called Great British Menu. It's a cooking show. I enjoy it. And they get these great chefs around the country here, and every episode they cook. And there's a theme each season, and the theme this season is innovation. So they've got to cook dishes that kind of celebrate British innovation. And one person did a dish about Tim Berners-Lee. You guys over there in the US, you invented kind of the backbone architecture for digital networks like ARPANET. Tim Berners-Lee kind of developed the HTML for the internet.

Chris Wow.

Scott And so he's kind of one of the British innovative icons. And he gave it free to the world. So, you know, unlike, you know, kind of like what, like the Zuckerbergs or the other tech titans who've made billions of dollars on their ideas. Like, no, this is just, this just makes sense for the world. Everybody start doing this. So, you know, he didn't cash in in the ways that he could have to the extent he could have on this idea that everyone has adopted. But you know what? I don't think there's anyone in this country that wouldn't answer his call if he called or said like, I want to do this and I need those resources to it. I mean, he could get them. So is his wealth measured in like the number of points that he has in his personal account? I mean, that's one measure of it. But when you've done things for other people that they value extremely highly, even if you haven't asked them for any money in return, you still have a kind of wealth in your society.

You can draw upon it for whatever you need to happen. And we just don't think, that's just nearly not as real to us. In the kind of the way we talk in society as the wealth that we can more easily measure based on the price of your stock or the money in your bank account. And I think we do ourselves a disservice when we think of wealth in such reductionist ways.

Chris You look at Pope Francis, who has more influence? I mean, he's got to be in the top 10 of influencers in the world, right? He literally is under a vow of poverty.

Scott Right. It's an extreme example.

Chris He has to be... No, I'm sure he eats nice meals and stuff. But his personal resources... If Pope Francis... I don't even know his credit score could get him an apartment outside of the Vatican, right? Which is interesting because he's this person of tremendous influence and power who, if he resigned tomorrow and wanted to go play golf, he probably couldn't afford a decent golf membership. I mean, which is just interesting the way we value things. This was fantastic.

Scott It's been fantastic. You know, just to round it up for me, like I look at the question we started with, what does money mean now? And what I hear in it is this personal challenge to explore what does money mean to me? And the more I feel like there's this tension, the more it means to me, the more it's crowding out other things that could have meaning. And so how can I... You know, while recognizing that it is this powerful and wonderful social technology that enables a complex and advanced economy to emerge, while recognizing all of that, how can I create more space just in my own head, in my own life, to recognize other measures of value and make myself richer because of that? That's what I personally hear in this question now after this conversation.

Chris Yeah, I completely agree. And I want to encourage our listeners to engage in this journey. And if Chris and I can help you on it, reach out to us. I mean, our emails are in the show notes, our social media is in the show notes.

Scott We're on Clubhouse every Monday night. Well, Monday night is my time. I guess it's Monday afternoon for you.

Chris Exactly. Yeah, so we're there. So we would love to talk with you because, you know, life is a team sport. You don't do it alone. And so, yeah, we'd love to help come alongside you in your journey. And this was great, Chris. Thank you for helping me think through something that was challenging to think through.

Scott Yeah, thank you too. Do it again soon.